The United States will extend a $553 million loan for the development of a terminal on the Port of Colombo, in a project in which India’s Adani group holds a majority stake.
Adani is developing the West Container Terminal (WCT) with Sri Lankan conglomerate John Keells Holdings and the state-run Sri Lanka Ports Authority (SLPA) on the Port of Colombo.
The Indian conglomerate holds a 51% stake in the project, while the Sri Lankan entities hold 34% and 15% stakes, respectively.
The Colombo port also has a terminal run by China Merchants Port Holdings, the South Container Terminal, in a joint venture with the SLPA.
The financing pledge by the US International Development Finance Corporation came on the same day as China’s CHEC announced plans to invest $1.56 billion in a port city project near Colombo.
The funding marked the single biggest injection of foreign direct investment in Sri Lanka, which is battling its worst financial crisis in over seven decades.
The US and China have for years been vying for influence in the country. In 2020, Washington had urged Colombo to choose “transparent and sustainable economic development” instead of “discriminatory and opaque practises” in an apparent dig at China.
On Wednesday, DFC CEO Scott Nathan said his institution’s “commitment of $553 million in private sector loans for the West Container Terminal (WCT) will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same strengthening the position of our allies across the region.”
The US Embassy in Colombo said in a statement on X (formerly known as Twitter), the WCT will “create jobs in Sri Lanka, and support the economy.”
The deal allowed Colombo to convert loans worth $6 billion it owed to China into equity. But the pact sparked widespread public anger in Sri Lanka and raised fears that China might use the port to dock naval vessels.
Meanwhile, India is also competing with China for influence in the island nation of 22 million, located near busy shipping routes.
New Delhi extended about $4 billion in swaps and credit lines to Sri Lanka last year, providing critical support to import fuel, medicine and fertiliser during the worst of the crisis.
Adani group has a wide spectrum of businesses from ports to edible oils. Its development of the West Container Terminal, a deepwater container facility, is the first foray by an Indian company into the sector.
Dredging for the terminal kicked off last November with the first stage to be completed in the third quarter of 2024 and the full project to be finished by the end of 2025.
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